As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface

Would sure like Cryptocurrency to crash soon so I can get a graphics card at retail price.

Claims behind cyptocurrency are flawed and based on ignorance of basic economics: A. Supply of bitcoins is ultimately fixed: First, it spawned hundreds of me-too's bypassing that claim. Second, despite claims of state printing money, it is economics 101 that money supply changes with economic conditions. It is the flow of money, not actual quantity of money that counts. Otherwise, what is the Fed doing with interest rate adjustments (the price of money)? Money supply grows when the economy grows. What happens to the economy if everyone put every cent they have under the mattress? Third, depositing/lending money with a bank changes the supply of money through the multiplier effect. Basic economics. B. Independence from state/authorities: Yet, rely on hackable exchanges, human programmers, anonymous founders, "mining" and anyone coming up another cyptocurrency. Just because you consider state-sanctioned currencies as fiat doesn't mean your cyptocurrency is good. Since when such a logic holds? C. Lots of energy/effort had been spent to create it and so it has value: Worse possible absurdity. Do spending energy digging holes and filling them up create value? D. It is the wave of the future: when you can't even decently use it today in the real economy? Ignorance that it is money, rather the "flow" of money, that powers an economy. These are ponzi schemes, straight and simple.

Never understood bitcoins or any virtual currency. Seems like air. Those that invest are pure gamblers, betting on a hand that doesn't exist.

Sounds like the Trump administration. Hackers. Fraud. Ponzi schemes.....

The first thing you learn when studying cryptography: A "one time pad" is the ONLY theoretically secure cryptographic scheme. (One time pads are what you see in the old war movies.) Cracking any other scheme can be done. It requires a lot of compute power and, for most things, not worth the trouble. But if the stakes are high enough that changes. You or I may not own enough computer power to do it but plenty of governments do. Since the basis of digital currency is theoretically unsound, regulating it makes no sense. Further, why regulate anything where fools try to make a quick buck?

Many of the negative facts are well known but it's the very concept of money beyond state control that NYTimes despises. The popularity of crypto just a reminder of the underlying feelings millions of people share to be free of the very statist authority worshiped by Keynesian culture. So it isn't the results the establishment hates but the very idea of money out of government control. The same people who supported the ban of private gold under FDR tyranny. Much of the analysis here is both Eurocentric, boomer rear view mirror in nature. Crypto motivations are huge, global, Asia and anti-authoritarian (state). I can't predict the long-term results financially but the Times and minions should get honest about what they really don't like and grasp how it is political cultural in nature dressed as "reasoned" with all fake news qualities that come from the term. As for block chain itself, that is very real in any case. Like the internet it's very hard to see where all the applications will go or who and how real profits and benefits will flow. Be peeved by that as well, top-down central management takes one in the head, guaranteed. It might be possible to cut off fiat from crypto with huge regulatory excess ("ideally prudent and informed regulation".....LOL/spare us but that's a joke). Regardless but the stuck in the 20th century central planning days are numbered. That's what the crypto event highlights and exposes the dying central planning cult for what it is.

So glad I bought all of those coins that I can stash away for safe keeping. Huh, what's Mt. Gox? Forget doing research, have you seen the value of this funny money lately?

There have been many attempts at virtual currencies over the decades, with Bitcoin being notably successful. A fundamental and interesting piece of a cryptocurrency (defined as a system where a distributed ledger is used to track the currency elements, and various cryptographic techniques used to demonstrate "possession" of a currency element), is how a currency element is created. Bitcoin and a large number of imitators such as Ether and Monero use the bootstrap "mining" method, a method rapidly becoming obsolete. Most ICOs promise nothing for their currency elements, and indeed there is usually no guarantee that more elements can't be created out of "thin air". A few bind to fiat currencies (dollars, euros, ...); these are inherently limited by what used to be known as M6 [central banks limit how much fiat is circulating, in turn limiting a currency based on fiat]. What is needed is a cryptocurrency that has a generally recognized value base but is not self limited by obsolete mining concepts, not a fictional fleecy creation like most (or all) ICOs, and not strictly bound to finite strangulating forces like central banks. The cryptocurrency would need to be sufficiently liquid to keep the distributed ledgers and related support operational (people have to eat and companies have to pay the bills). Such a cryptocurrency does not exist yet, but the world is getting closer as blockchain is adopted and the experimental cryptocurrency mania genetically plays out.

Fools and their money...well, you know.

Bitcoin is nothing more than an electronic Ponzi scheme. The only one making money are the companies selling the mining hard and software. And to think people listened to that Leprechaun on his Unicorn selling bitcoin.

After reading the article, I've come to the conclusion that Bitcoin has the same issues as with regular stocks and the banking system: Fraud, ponzi schemes, hacking. Bitcoin should fit will with that group. Oh, don't tell me about how stocks and banks are regulated. After the last banking collapse, not one executive of any stature went to jail.

I suspect a lot of tech-savvy but naive college students lost a bunch of money. The bubble was fueled by a word-of-mouth frenzy on campus about overnight riches. Some of them had already made plans to retire on their huge phantom gains. A hard, but valuable lesson: if it sounds too good to be true, it probably is.

What many readers don't understand is that most 'real' currencies, including the US dollar are based on fiat - i.e. the declaration by a government that they are legal tender, and not some commodity or guarantee. Bitcoin has survived, in fact, it's thrived, based on nothing more than a similar sort of consent, and the promise (hope?) that the encryption process will remain at once tamper-proof and transparent. A single bitcoin probably isn't worth $20,000, or $10,000, or maybe not even $1,000, but it does have value, and, as long as governments continue to inflate their fiat currencies, that value should increase.

Bitcoin is only worth what you can buy with it, including other currencies. Likewise money backed by its issuing nation. In fact, the same is true of gold, or silver. The underlying stability of any paper, metal or other commodity you can’t eat is wholly determined by a public’s confidence in it, the size of that public and a limited supply. (Think notes from a chaotic African nation vs. U.S. dollars. Or post war Germany attempting to create wealth by running printing presses.) Bitcoin can fit that model, but so can turquoise. It seems like a great idea, but ultimately it will need strong agreements (that dreaded term “regulation”) to be stable.

Ha, ha, ha, ha, ha, ha !

Gee, what a shocker. A pretend currency based on internet hype and hope, ideally designed, intentionally or otherwise, to abet rogue states and criminal activity, is not really the next best thing. As is typical in these matters, a few lapped up a fortune and lot lost their shirts. Caveat emptor remains sage advise.

And this is different than the almighty, all-knowing, rational "market" Trump loves so much?

What could possibly go wrong with no one at the helm? Sounds like a triumph of Small Government libertarians if I ever saw one.

In the accompanying photo, the Hong Kong computer store seems to be indulging in a bit of truth in advertising, probably unintentionally. Look at how Bitcoin is spelled.

I was stunned to find out a few months ago the value of one bitcoin was something like 16,000-something dollars. Now, to read the value today is less than $7000 is riotously funny. I am a poor slob, surviving month-to-month as I've always done. I don't have investment money but if I did I can say that bitcoin would be the last choice on my investment list, sliding in between shares of Enron and Bernie Madoff's hedge fund. Prediction: bitcoin melts down altogether and is phased out in 2 years.

The solution to monetary uncertainty is pretty simple. Have the US government introduce a digital currency with the transactional advantages of non-governmental international exchange but the regulatory oversight of traditional currencies. Cyber currencies are basically tied to currency exchange markets anyway. They are not, generally speaking, an M1 money supply. Therefore, the US government, or other government, can offer the same financial service without the obvious regulatory draw backs. Any transaction operating in good faith is going to opt for the government backed digital transaction over the black market. The problem is we'll all be dead before the public sector understands, much less implements, digital currency as a monetary policy. I expect the situation to get worse before it gets better.

Bitcoin is based on technology that is very innovative and potentially valuable to many different industries. That's the good part. Bitcoin as a currency, on the other hand, is poorly conceived and under-regulated, which makes it unsafe for most users. The cryptocurrency movement will undoubtedly evolve based on lessons learned from Bitcoin, and develop newer, safer products that are regulated to some extent. It seems highly unlikely that any unregulated currency will ever be reliable enough to be useful to anyone other than criminals.

Why not create some sort of international currency, backed by whichever nations buy into it, that is good in all participating countries? Similar to the Euro, but without forcing anyone to give up their own currency.

Why would anybody store value in Bitcoin? Nothing backs it; no gold, no nation. The underlying math has never been proven secure. The software implementation of that math has never been proven correct. Indeed, many bugs have already been exploited to steal large numbers of Bitcoins. The whole system was designed by unknown people, for unknown purposes. I would consider using Bitcoins for money transfer (e.g. if I were a victim of ransomware) but would never think of it as a safe place to store my money, and especially not as a sound investment.

What did anyone expect, especially of something that was smoke and mirrors to begin with? We've seen bubbles before. Invariably, they burst. I guess a handful of people wanted to make big money quickly and got out in time. The rest will have to live with their foolish choices.

"Some virtual currency enthusiasts argue that the problems are no different from what has happened in other booms, like the internet bubble of the 1990s." Is that supposed to be good?